Let’s divide emerging markets into two categories: China and the rest of them.

China

Measuring using Purchasing Power Parity, China is the largest country in the world. It’s much faster growing than other large economic areas, like the US or the EU. It’s also accessible to foreigners in several ways: through Hong Kong-traded stocks, through China-centric mutual funds and ETFs and for individual mainland equities through connections among the Hong Kong, Shanghai and Shenzhen stock exchanges.

I have conflicting thoughts about China today.

The country is currently going through a transition from GDP growth through low value-added, export-oriented industries to expansion through consumer-oriented domestic demand. This is never smooth sailing. At the same time, two of its biggest export markets, the EU and Japan, have undergone massive currency devaluations. This makes the transition more urgent–and potentially much more choppy, since China-sourced products are now much more expensive there.

That’s the near-term bad news.

On the longer-term positive side, the inward, anti-trade turn being signaled by the incoming Trump administration will, I think, mark the shifting of the mantle of world leadership–with its attendant pluses and minuses–from the US to China. (To be clear: although I think this may be the signature result of the Trump administration, I don’t think Mr. Trump intends this outcome; he’s just clueless. And the real cause is policy failure by the two major domestic political parties over the past decade or more.)

One plus will likely be a greater desire by foreigners to own Chinese stocks and, because of this, a gradual PE multiple expansion for them. A potential minus will be more pressure on Beijing to loosen Communist Party control over its financial institutions and its currency, which will subject the renminbi to the speculative ups and downs of currency traders.

My bottom line: I mostly see bumps in the road for China in 2017. I’m keeping a small China position, comprised of mutual funds and Macau casino stocks. But I feel no strong urge to buy more.